Detroit debuts hold keys to recovery

AugustCole

DETROIT (CBS.MW) -- The new models and concept cars introduced at the North American International Auto Show in Detroit will be more important than ever as the industry seeks to wean wary consumers off big discounts in favor of pricier, must-have products.

The cheap financing that helped save 2002 can't necessarily be counted on in 2003. See full story. It's design that needs to do the trick.

"There's a lot of concern whether they can start generating products that have inelastic demand curve," said David Littmann, chief economist at Comerica Bank in Detroit.

Exactly. Cars you can't rationally resist.

The bigger the better, too. New trucks from Ford
F, +1.07%
and Nissan show that one of the most profitable and hotly contested segments of the U.S. market is still up for grabs. This class, along with SUVs, is an incredibly strong niche as it handily outsells passenger cars.

Ford is betting it can keep the momentum from its F-150 line of trucks going. That's no small task when you consider more than 800,000 F-series trucks were sold in 2002. With the title of the best-selling vehicle ever from the blue-oval brand, the pickup must be well received at its debut and then flaw-free when it rolls off the line.

Nissan wants in, too, and will introduce a full-size truck that will be built here in the U.S., a first for the Japanese automaker. That launch and the debut of a new Siena minivan will have industry watchers closely watching.

"Nissan is really going to be the big show-maker," said Rod Lache, Deutsche Bank auto analyst.

Not that the car segment is a wasteland. The opposite may turn out be true as General Motors
GM, +3.40%
ratchets up its focus on the four-doors. Along with a new truck, the latest Chevrolet Malibu that's based on a well-regarded platform already used by Saab's 9-3 will be one to watch.

In the midsize sedan market, which includes Japanese favorites like the Honda Accord and the Toyota Camry, GM is gaining ground with reliability and overall improvements, according to Scott Hill, Sanford Bernstein auto analyst. A shifting focus to the light truck market by the Japanese companies may create a window of opportunity for the world's biggest automaker to gain some ground, he noted. That confidence should be evident in the convention center even as Honda readies a new Acura sports sedan.

The level of showmanship will be high, with dry ice, booming sound systems and lasers to convince the motoring public and industry press that style matters most this year. This is an industry that likes to make a splash with new products. Even in tough times when red ink rules, glitz will be the norm as automakers vie for the attention of sometimes jaded journalists.

That's why eyes will be turned to high-rollers like Rolls-Royce and Lamborghini, both slated to formally turn out new models at the show.

Ear to the ground

Though the show isn't oriented to consumers like the Chicago show, the industry will be hungry for reaction to new vehicles as well as hearing how the economy will shape up this year.

"I think everyone is going to be focused on the demand environment at the end of the day," said Hill.

Events of this scope also come with considerable security. When you consider the heads of one the world's largest industries are all together under one roof, it's understandable. Last year saw bomb-sniffing dogs and no shortage of serious-looking security guards with pants tucked into their boots guarding the floor entrances.

This year should be no different with preparations, though fears of terrorism shouldn't have any impact on attendance, which should be over 800,000 all told, said Littmann, the Comerica economist.

"I don't think this one has that in the absence of any other major problem," he noted.

Media access to the show begins early Sunday morning and runs through Wednesday. For the public, the event opens on Jan. 11 and continues through Jan. 20.

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